21 st Annual Needham Growth Conference. January 15, 2019

Transcription

1 21 st Annual Needham Growth Conference January 15, 2019

2 Forward-Looking Statements Certain statements in this communication may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of These statements, including statements regarding Tech Data s plans, objectives, expectations and intentions, Tech Data s financial results and estimates and/or business prospects, involve a number of risks and uncertainties and actual results could differ materially from those projected. These forward looking statements are based on current expectations, estimates, forecasts, and projections about the operating environment, economies and markets in which Tech Data operates and the beliefs and assumptions of our management. Words such as expects, anticipates, targets, goals, projects, intends, plans, believes, seeks, estimates, variations of such words, and similar expressions are intended to identify such forward looking statements. In addition, any statements that refer to Tech Data s future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances, are forward looking statements. These forward looking statements are only predictions and are subject to risks, uncertainties, and assumptions. Therefore, actual results may differ materially and adversely from those expressed in any forward looking statements. For additional information with respect to important risks and other factors that could cause actual results to differ materially from those in the forward-looking statements, see Tech Data s Annual Report on Form 10-K for the year ended January 31, 2017, including Part I, Item 1A, Risk Factors therein, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other securities filings with the Securities and Exchange Commission (the SEC ) that are available at the SEC s website at and other securities regulators. Readers are cautioned not to place undue reliance upon any such forwardlooking statements, which speak only as of the date made. Many of these factors are beyond Tech Data s control. Unless otherwise required by applicable securities laws, Tech Data disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Tech Data undertakes no duty to update any forward looking statements contained herein to reflect actual results or changes in Tech Data s expectations. Use of Non-GAAP Financial Information This document includes financial results prepared in accordance with generally accepted accounting principles ( GAAP ). In addition to GAAP results, Tech Data management believes that the presentation of non-gaap financial measures is useful to investors because it provides investors with a more complete understanding of our operational results and a meaningful comparison of our performance between periods. The non-gaap results and outlook should only be used in conjunction with results reported in accordance with GAAP and are not intended to be a substitute for results reported in accordance with GAAP. Non- GAAP financial measures presented in this presentation or other presentations, press releases and similar documents issued by Tech Data, include but are not limited to sales, income or expense items as adjusted for the impact of changes in foreign currencies (referred to as constant currency ), non-gaap selling, general and administrative expenses ( SG&A ), non-gaap operating income, non-gaap operating margin, non-gaap net income, non-gaap earnings per diluted share and Adjusted Return on Invested Capital. These non-gaap financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similar measures presented by comparable companies. Management may also use these non-gaap financial measures to establish operational goals and, in some cases, for measuring performance for compensation purposes. This presentation provides a detailed reconciliation between results reported in accordance with GAAP and non-gaap financial measures. 2

3 About Tech Data One of the world s largest distributors of technology solutions FY18 sales: $34 billion; 54% Europe; 43% Americas; 3% Asia-Pacific An indispensable link in the IT supply chain An efficient route to market for 1,000+ leading technology vendors Hundreds of thousands of products sold to 125,000+ value added resellers (VARs), direct marketers, retailers End-to-end portfolio of IT product and service offerings From Endpoint, Advanced and Specialized Solutions Track record of strong financial performance Solid EPS growth, strong cash flow generation, and ROIC > WACC Value creation through balanced capital allocation Organic growth, targeted M&A, and share repurchases 3

4 Worldwide Financial Highlights Q3 FY 19 ended October 31, 2018 (1) (1) $9.3 billion 11% $188 million 39% $ % Broad-based growth across all regions and solutions portfolios Operating cash flow: $155 million Adjusted ROIC: 12% (1) Debt Repayment: $100 million Share repurchases: $44 million (1) GAAP to non-gaap reconciliations available at 4

5 Worldwide Financial Highlights Q3 FY 19 Year-to-date (1) (1) $26.8 billion 14% $447 million 16% $ % YTD Operating cash flow: $149 million Debt Repayment: $200 million Cash balance: $646 million (1) GAAP to non-gaap reconciliations available at 5

6 Indispensable Link in the IT Ecosystem ONE-STOP SHOPPING FOR OUR CUSTOMERS Corporate Resellers Corporate resellers VAR VARs Corporate Resellers Retailers 1,000+ Vendors 125,000+ Customers End-Users CREATING AN EFFICIENT ROUTE TO MARKET FOR OUR VENDORS 6

7 Value Proposition to Vendors Access to Fragmented Mkt Variable-Cost Route to Market World Class Logistics Integrated Supply Chain Cloud Aggregation Corporate Resellers Corporate resellers VAR VARs Corporate Resellers Retailers 1,000+ Vendors 125,000+ Customers AN EFFICIENT ROUTE TO MARKET FOR OUR VENDORS 7

8 Value Proposition for our Customers Product Availability Multi-vendor Solutions Technical Support Financing/ Inventory Mgmt. Marketing Support Corporate Resellers Corporate resellers VAR VARs Corporate Resellers Retailers 1,000+ Vendors 125,000+ Customers ONE-STOP SHOPPING FOR OUR CUSTOMERS 8

9 Balancing Portfolio Attributes ROIC >WACC Endpoint Solutions Advanced Solutions Product Sets PC and Mobility Ecosystem PCs, Handsets, Tablets, Printers, Supplies, Software Data Center Ecosystem Networking, Storage, Servers, Hyperconverged, Analytics, Software Margin Profile Lower Margin Higher Margin Asset Turns Higher Working Capital Velocity Lower Working Capital Velocity 9

10 High-Quality Asset Mix LOWER-RISK PROFILE Accounts Receivable Inventory Diversified customer base No single customer >10% of sales Credit insurance for majority of non U.S. accounts receivable High velocity inventory turnover Stock rotation and/or price protection provided by many vendors Significant portion of sales shipped directly by vendor to end-user Counter-cyclical working capital profile generates cash flow during periods of declining sales 10

11 Focus on Return on Invested Capital 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% ADJUSTED ROIC (1) 14% 13% 12% 12% 11% FY15 FY16 FY17 FY18 TTM FY19 WACC = ~9% (1) Trailing Twelve Month Adjusted ROIC reconciliation available at 11

12 Disciplined Capital Allocation Organic investments Invest in next-gen technology portfolio & skills Solutions & services offerings Business optimization Digital transformation Targeted M&A Share Repurchases Invest in next-gen technology portfolio & skills Optimize global footprint Strong track record of returning excess capital to shareholders 12

13 Our Strategy: Moving to Higher Value Cloud Analytics & IoT Security Services Hyperconverged/ Software-Defined Edge Technologies TaaS Portfolio Management Process Redesign Automation Advanced Analytics Marketplaces Geographic Expansion Global Business Optimization (GBO) 13

14 Connecting the World with the Power of Technology TM 14